Recent price action appears the Brexit risk gradually easing in the UK economy. This week’s Q4 GDP and November labor market update will cast the GBP near term trend. We are more focused to the labor market updates and average earnings data.
Looking forward to the next MPC meeting (Feb 08), we believe policymakers will influence by this week’s economic data outcome.
- The Consumer Prices Index 12-month rate was 3.0% in December 2017, down from 3.1% in November 2017
- December retail sales fell 1.5%, recorded the biggest month-on-month decline since June 2016.
FX participants now shift the focus to data. We believe UK Q4 GDP grow at 0.4% on QoQ basis. Average earnings growth likely to remain at 2.5%.
The EURGBP price action forecast to further retracement. As we pointed in our earlier article the price already capped at 0.9030 now again capped between 0.8925-0.8930.
Last two week’s price action appeared a clear distribution pattern finally ended with a clear breakdown. We believe 0.8700 and 0.8570 are still possible. Any minor rebound toward 0.8800 could face selling pressure again.
A weekly close below 61.8% fib reaction (0.8310-0.9300 rally) could open in 0.8520.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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